Budgeting gets a bad rap in our culture where instant gratification is the norm. At the same time, the burden of debt and out-of-control spending is a sobering reality for many Americans today, regardless of background or income level. It doesn’t have to be that way! Budgeting is a foolproof method to take back your bank account and start living from a place of financial peace and contentment instead of worry and stress. Remember, only you have the power to stay in control of your money!

I’ll be the first to admit I used to buy into the lie that living on a budget was code for boring and restrictive. I thought if you were on a budget, that meant you could never get a manicure, buy anything other than generic brands at the grocery store, or have a fun night out with friends.

The truth is, having a plan for your money doesn’t limit your freedom — it gives you freedom and permission to spend. We all know how important boundaries are, and this is a simple way to set boundaries for yourself and your money so you can save, be generous, and hit every single one of your financial goals.

So, let’s talk about how to make — and live on — a budget.

1. Make your budget zero-based.

It might sound strict and intimidating, but a zero-based budget just means your income for the month minus all of your expenses (including giving and saving) equals zero. Here’s the step-by-step breakdown:

• First, list your monthly income. You can do this on paper, a spreadsheet, or a free budgeting app. Write down every form of income you get throughout the month, from regular paychecks to side hustles to child support — anything that you know will be money coming in. Then add up each of these to get your total income.
• Next, list your monthly expenses. Think of everything you spend money on throughout the month and write them out in this order: giving, savings, the Four Walls (that means the most important bills you need to cover — food, utilities, shelter, and transportation), other essentials (like insurance and debt payments), and any month-specific expenses (like birthdays or holidays). You can also add a miscellaneous category for random expenses that don’t fit in anywhere else. Once you’ve written down all of your expenses, add them up.
• Then, subtract your total expenses from your total monthly income. The result should be zero. If it’s not, don’t panic — that just means your budget needs a little adjusting.

If you ended up having some extra money left over — amazing! Put it toward your debt if you have any or throw it at one of your savings goals.

If you ended up with a negative number as your total, that means you have more expenses than income. This can be fixed by finding ways to either cut back on expenses, bring in extra money, or both.

When it comes to cutting back, look for things that you don’t truly need to spend money on right now or that you could find a cheaper substitute for. For example, could you make more meals at home instead of ordering food? (That’s hard, I know — this girl loves a good pizza delivery.) Could you work out with YouTube videos or train with a friend in place of paying for a gym membership? Could you cancel some streaming services and rent movies from the library instead? You get the idea.

When it comes to making more income, this will depend on what makes sense for you and your schedule. If you’re able to, you could take on a second or part-time job, or spend a few hours a week on some kind of side hustle. A few examples: freelance writing or editing, pet sitting or dog walking, tutoring, nannying, driving for a rideshare, delivering food, reselling items on a site like Poshmark, doing makeup for events, creating an online course, selling an e-book, or selling items on Etsy. The good news is, pretty much anything you’re naturally gifted at or enjoy doing could be turned into some kind of side hustle.

Once your income minus your expenses equals zero and every single dollar of your income has been assigned to a budget category, your zero-based budget is complete — but the budgeting doesn’t stop there.

2. Track your purchases throughout the month.

This is the other key element of living on a budget and actually putting these ideas into practice. You can keep track of what you’re spending and where by looking at your online bank statements and receipts. Or you can connect your bank account to your budgeting app so it tracks transactions for you. This way, you know how much you’ve already spent in each category and avoid accidentally overspending.

3. Allow yourself 90 days to get the hang of it.

When you begin budgeting, you might need to guess on some of these numbers (how much you expect to spend on groceries that month, for example). But you can always look at bank statements from past months to give you a good starting point, and from there you can figure out which budget categories to cut back on. Remember: Any new habit is going to take time to develop, so don’t get discouraged if your first few budgets are a bit of a challenge. It’ll get easier.

4. Don’t budget alone.

If you’re married, you and your spouse are a team. You want to walk through the budgeting process and face any money challenges or problems together. Before the start of a new month, schedule time for a budgeting meeting, where you’ll create a budget for the upcoming month. You can even turn this into a cute (and nerdy) date night with snacks, candles, and fun music. If you’re in a serious relationship but not married, I don’t recommend combining finances until marriage. But I do recommend you talk about your finances and future goals all along the way. You can be great cheerleaders for each other!

If you’re single, it’s just as important to have community and accountability with budgeting. Sit down with someone you trust (who’s good with money!), walk them through your budget, and listen to any feedback they might have. You don’t have to show them the actual numbers if you’re not comfortable with that, but at least ask them to hold you accountable to making and sticking to your budget every month. And find other people who are also working toward a debt-free lifestyle so you can encourage and help each other. You can go to ramseysolutions.com and sign up for a Financial Peace University class in your area or join the official Ramsey Baby Steps Community on Facebook!

5. Give yourself grace.

Let’s be real: Sometimes life happens, and you have to adjust your budget throughout the month. Maybe your AC unit breaks in the middle of summer or the price of eggs suddenly skyrockets for no apparent reason (sigh). There are a ton of different things that could pop up as you’re learning to live on a budget, so make sure to give yourself plenty of grace in this whole process.

I’ve heard thousands of budgeting success stories from every level of income and every level of debt you can imagine, and the one common denominator is that they stuck to the plan month after month, and they had hope. They believed they could live on a budget and change their financial circumstances as a result, and that’s exactly what they did! You can too. Once you start gaining momentum, your confidence with budgeting will just keep growing — and you’ll be able to take control of your money and create a life you love.